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A study released today that found an estimated 1 in 4 consumers in the U.S. have errors on their
credit report provides further evidence that the national credit-reporting system is broken.

That means that as many as 40 million consumers may have at least one mistake on one of their
three national credit reports, which determine who gets credit and how much they pay for it.

The Federal Trade Commission released the fifth interim report to Congress this morning on
the accuracy of credit reports. Its final report is due by December 2014.

The study is considered the most comprehensive look at the accuracy of credit reports and
amplifies the findings of a year-long investigation by
The Dispatch in 2012 into flaws in the nation’s credit-reporting system.

The FTC study involved 1,001 participants randomly selected to match the national
distribution of credit scores. Those consumers reviewed their credit reports and filed disputes to
correct what they considered errors.

Other key highlights of the study include that 19 percent of the consumers found serious
errors that could affect their ability to buy a house or car, land a job or drive up the cost of
auto and home insurance.

About 16 percent of the participants said they were unable to persuade credit-reporting
agencies to fully correct errors. “If true errors remain . . . the current (Fair Credit Reporting
Act) dispute process if not serving these consumers well,” the FTC concluded.

Experian, Equifax and TransUnion, the three national credit-reporting agencies, have been
under fire from state and federal regulators since a
Dispatch Credit Scars series in May, which can be found
here, exposed
systemic problems with their practices and flaws in the federal law that governs credit reports.
The Dispatch followed up with two more series on the topic last year.

Consumers who find an error face a daunting task to erase the mistake. Echoing the
Dispatch's findings, the federal Consumer Financial Protection Bureau found in study it
released in December that the credit-reporting agencies rarely, if ever, conduct real
investigations into allegations of errors. The television news program
60 Minutes also reported the story last night, basing its report largely on the same
sources used in the
Dispatch investigation.

Currently, a consumer complaint is reduced to a two-digit code and sent electronically to the
creditor who is the subject of the possible mistake. The credit-reporting agencies almost never
forward documentation supplied by the consumer to prove the case.

Federal officials also are concerned that 30 percent of "disputes" – the process by which a
consumer attempts to erase errors – involve an account in collection.